Plans by Blue Cross and Blue Shield of Minnesota (BCBS) to implement a new payment model that is expected to have an egregious impact on the bottom line of the Granite Falls Hospital and other rural health providers have been throttled back until January 1, 2014, according to a statement released by the health insurer on Wednesday, May 1– the same day that the new model had been scheduled to go into effect.

By Scott TedrickNews Editor

Plans by Blue Cross and Blue Shield of Minnesota (BCBS) to implement a new payment model that is expected to have an egregious impact on the bottom line of the Granite Falls Hospital and other rural health providers have been throttled back until January 1, 2014, according to a statement released by the health insurer on Wednesday, May 1– the same day that the new model had been scheduled to go into effect. "That Blue Cross has decided to push back the changes until next year was extremely welcome news," said Granite Falls Administrator and CEO George Gerlach. "It still leaves us with just eight months to prepare for a major impact to our budget, but at least now we'll have the time to be able to explore some different options." According to Gerlach, Granite Falls Hospital did not become aware of the changes to the payment plan until February of this year. Originally, BCBS had intended to go ahead with the new system in March before delaying implementation until May 1, which would still have left Granite Falls and other healthcare providers little time to adjust their operations or raise awareness of the potential impact. For Granite Falls, the adjustment would have cut into the hospital budget by an estimated $900,000 – a hefty sum when considering that the entire hospital has a $17 million budget and already operates on a tight margin. BCBS, which is the dominant health insurer in outstate Minnesota, says that the purpose of the planned adjustments was to reduce the margin of difference that it pays to hospitals for similar medical care procedures, thereby incentivizing new approaches for cost savings. The Minnesota Hospital Association, however, strongly opposed the agenda, stating that BCBS was unilaterally attempting to alter a payment model that had been in place for decades by a degree that could limit access to health services in rural areas. In addition, the hospital association accused the insurer of being unwilling to discuss the matter with affected hospitals and timing the implementation so that people would associate any negative outcomes with Obamacare. As the implementation moved closer to reality calls for assistance from hospital administrators throughout resulted in an 11th hour meeting between Attorney General Lori Swanson and BCBS CEO Michael Guyette on April 29. No details were offered about the content of the exchange, but by Wednesday BCBS had undergone a significant change to its approach on the matter. "Blue Cross is striving to be thoughtful and responsive to the operational and financial planning challenges of these hospitals," said the company in a statement. "As a result, we have adjusted the implementation date of this new payment system to January 1, 2014 in an effort to ease the transition." In addition, the statement said that Blue Cross will work to open up lines of communication with impacted hospitals, share in software upgrade related costs and, finally, create a 'safety net'' for hospitals with insufficient operating margins that ensures payments will cover the cost of care provided to Blue Cross commercial members. Gerlach said that he received a phone call from the insurer on Wednesday indicating the plan's delay as a willingness to work with the hospital. "I sensed a complete change in their tone," he said. While certainly pleased with the eight- month reprieve, Gerlach indicated that the hospital will have to take a long look at its budget as well as other projects, like its plans to construct a new nursing home. At this point the hospital is still moving forward with the project, but expects that it will at least have to push back the deadline for completion given new hurdles that have resulted from Blue Cross' actions.